PAYG instalments are used to collect amounts towards your expected income tax liability on your business and investment income during the income year.
Your actual tax liability is worked out at the end of the income year when with your annual tax return. Your PAYG instalments are credited against your assessment to work out if you owe more tax or are owed a refund of some of the tax you have paid.
Individuals who have gross business or investment income of $2,000 or more on their latest tax return will be notified of an instalment rate, unless one of the following applies:
- The tax payable on your most recent notice of assessment is less than $500.
- Your notional tax is less than $250.
- You are entitled to the seniors and pensioners tax offset.
Companies and super funds will be notified of an instalment rate if either your:
- Instalment rate is more than 0%
- Notional tax is more than $250.
However, if your gross business and investment income is more than $2 million, you may only have the instalment rate option.
For more information regarding PAYG Instalments and how they may apply to you, you can access the ATO website here.